Vladimir Ilyich Lenin

Imperialism, the Highest Stage of Capitalism

A POPULAR OUTLINE

V. DIVISION OF THE WORLD AMONG CAPITALIST ASSOCIATIONS

Monopolist capitalist associations, cartels, syndicates and

      trusts first divided the home market among themselves and

      obtained more or less complete possession of the industry of

      their own country. But under capitalism the home market is

      inevitably bound up with the foreign market. Capitalism long ago

      created a world market. As the export of capital increased, and

      as the foreign and colonial connections and “spheres of

      influence” of the big monopolist associations expanded in all

      ways, things “naturally” gravitated towards an international

      agreement among these associations, and towards the formation of

      international cartels.

This is a new stage of world concentration of capital and

      production, incomparably higher than the preceding stages. Let

      us see how this supermonopoly develops.

The electrical industry is highly typical of the latest

      technical achievements and is most typical of capitalism at the

      end of the nineteenth and the beginning of the twentieth

      centuries. This industry has developed most in the two leaders

      of the new capitalist countries, the United States and

      Germany. In Germany, the crisis of 1900 gave a particularly

      strong impetus to its concentration. During the crisis, the

      banks, which by that time had become fairly well merged with

      industry, enormously accelerated and intensified the ruin of

      relatively small firms and their absorption by the large

      ones. “The banks,” writes Jeidels, “refused a helping hand to

      the very firms in greatest need of capital, and brought on first

      a frenzied boom and then the hopeless failure of the companies

      which had not been connected with them closely

enough.”[1]

As a result, after 1900, concentration in Germany progressed

      with giant strides. Up to 1900 there had been seven or eight

      “groups” in the electrical industry. Each consisted of several

      companies (altogether there were 28) and each was backed by from

      2 to 11 banks. Between 1908 and 1912 all these groups were

      merged into two, or one. The following diagram shows the

      process:

The famous A.E.G. (General Electric Company), which grew up in

      this way, controls 175 to 200 companies (through the “holding”

      system), and a total capital of approximately1,500

      millionmarks. Of direct agencies abroad alone, it has

      thirty-four, of which twelve are joint-stock companies, in more

      than ten countries. As early as 1904 the amount of capital

      invested abroad by the German electrical industry was estimated

      at 233 million marks. Of this sum, 62 million were invested in

      Russia. Needless to say, the A.E.G. is a huge “combine”—its

      manufacturing companies alone number no less than sixteen—producing

      the most diverse articles, from cables and

      insulators to motor-cars and flying machines.

But concentration in Europe was also a component part of the

      process of concentration in America, which developed in the

      following way:

Thus,twoelectrical “great powers” were formed: “there

      are no other electrical companies in the worldcompletelyindependent of them,” wrote Heinig in his

      article “The Path of the Electric Trust.” An idea, although far

      from complete, of the turnover and the size of the enterprises

      of the two “trusts” can be obtained from the following figures:

And then, in 1907, the German and American trusts concluded an

      agreement by which they divided the world between

      them. Competition between them ceased. The American General

      Electric Company (G.E.C.) “got” the United States and

      Canada. The German General Electric Company (A.E.G.) “got”

      Germany, Austria, Russia, Holland, Denmark, Switzerland, Turkey

      and the Balkans. Special agreements, naturally secret, were

      concluded regarding the penetration of “daughter companies” into

      new branches of industry, into “new” countries formally not yet

      allotted. The two trusts were to exchange inventions and

      experiments.[2]

The difficulty of competing against this trust, actually a

      single world-wide trust controlling a capital of several

      thousand million, with “branches”, agencies, representatives,

      connections, etc., in every corner of the world, is

      self-evident. But the division of the world between two powerful

      trusts does not preclude redivision if the relation of forces

      changes as a result of uneven development, war, bankruptcy, etc.

An instructive example of an attempt at such a redivision, of

      the struggle for redivision, is provided by the oil industry.

“The world oil market,” wrote Jeidels in 1905, “is even today

      still divided between two great financial groups—Rockefeller’s American Standard Oil Co., and Rothschild and

      Nobel, the controlling interests of the Russian oilfields in

      Baku. The two groups are closely connected. But for several

      years five enemies have been threatening their

monopoly”:[3](1) the

      exhaustion of the American oilfields;(2) the competition of the

      firm of Mantashev of Baku;

(3) the Austrian oilfields;

(4) the

      Rumanian oilfields;

(5) the overseas oilfields, particularly in

      the Dutch colonies (the extremely rich firms, Samuel and Shell,

      also connected with British capital). The three last groups are

      connected with the big German banks, headed by the huge Deutsche

      Bank. These banks independently and systematically developed the

      oil industry in Rumania, for example, in order to have a

      foothold of their “own.” In 1907, the foreign capital invested

      in the Rumanian oil industry was estimated at 185 million

      francs, of which 74 million was German

capital.[4]

A struggle began for the “division of the world”, as, in fact,

      it is called in economic literature. On the one hand, the

      Rockefeller “oil trust” wanted to lay its hands oneverything; it formed a “daughter company”right

      inHolland, and bought up oilfields in the Dutch Indies, in

      order to strike at its principal enemy, the Anglo-Dutch Shell

      trust. On the other hand, the Deutsche Bank and the other German

      banks aimed at “retaining” Rumania “for themselves” and at

      uniting her with Russia against Rockefeller. The latter

      possessed far more capital and an excellent system of oil

      transportation and distribution. The struggle had to end, and

      did end in 1907, with the utter defeat of the Deutsche Bank,

      which was confronted with the alternative: either to liquidate

      its “oil interests” and lose millions, or submit. It chose to

      submit, and concluded a very disadvantageous agreement with the

      “oil trust.”  The Deutsche Bank agreed “not to attempt anything

      which might injure American interests.” Provision was made,

      however, for the annulment of the agreement in the event of

      Germany establishing a state oil monopoly.

Then the “comedy of oil” began. One of the German finance kings,

      von Gwinner, a director of the Deutsche Bank, through his

      private secretary, Stauss, launched a campaignfora

      state oil monopoly. The gigantic machine of the huge German bank

      and all its wide “connections” were set in motion. The press

      bubbled over with “patriotic” indignation against the “yoke” of

      the American trust, and, on March 15, 1911, the Reichstag, by an

      almost unanimous vote, adopteda motion asking the government to

      introduce a bill for the establishment of an oil monopoly. The

      government seized upon this “popular” idea, and the game of the

      Deutsche Bank, which hoped to cheat its American counterpart and

      improve its business by a state monopoly, appeared to have been

      won. The German oil magnates already saw visions of enormous

      profits, which would not be less than those of the Russian sugar

      refiners.... But, firstly, the big German banks quarrelled among

      themselves over the division of the spoils. The

      Disconto-Gesellschaft exposed the covetous aims of the Deutsche

      Bank; secondly, the government took fright at the prospect of a

      struggle with Rockefeller, for it was very doubtful whether

      Germany could be sure of obtaining oil from other sources (the

      Rumanian output was small); thirdly, just at that time the 1913

      credits of a thousand million marks were voted for Germany’s war

      preparations. The oil monopoly project was postponed. The

      Rockefeller “oil trust” came out of the struggle, for the time

      being, victorious.

The Berlin review,Die Bank, wrote in this connection

      that

      Germany could fight the oil trust only by establishing an

      electricity monopoly and by converting water-power into cheap

      electricity. “But,” the author added, “the electricity monopoly

      will come when the producers need it, that is to say, when the

      next great crash in the electrical industry is imminent, and

      when the gigantic, expensive power stations now being put up at

      great cost everywhere by private electrical concerns, which are

      already obtaining certain franchises from towns, from states,

      etc., can no

      longer work at a profit. Water-power will then have to be

      used. But it will be impossible to convert it into cheap

      electricity at state expense; it will also have to be handed

      over to a ‘private monopoly controlled by the state’, because

      private industry has already concluded a number of contracts and

      has stipulated for heavy compensation.... So it was with the

      nitrate monopoly, so it is with the oil monopoly, so it will be

      with the electric power monopoly. It is time our state

      socialists, who allow themselves to be blinded by a beautiful

      principle, understood, at last, that in Germany the monopolies

      have never pursued the aim, nor have they had the result, of

      benefiting the consumer, or even of handing over to the state

      part of the promoter’s profits; they have servedonly to

      facilitate, at the expense of the state, the recovery of private

      industries which were on the verge of

bankruptcy.[5]

Such are the valuable admissions which the German bourgeois

      economists are forced to make. We see plainly here how private

      and state monopolies are interwoven in the epoch of finance

      capital; how both are but separate links in the imperialist

      struggle between the big monopolists for the division of the

      world.

In merchant shipping, the tremendous development of

      concentration has ended also in the division of the world. In

      Germany two powerful companies have come to the fore: the

      Hamburg-Amerika and the Norddeutscher Lloyd, each having a

      capital of 200 million marks (in stocks and bonds) and

      possessing shipping tonnage to the value of 185 to 189 million

      marks. On the other hand, in America, on January 1, 1903, the

      International Mercantile Marine Co., known as the Morgan trust,

      was formed; it united nine American and British steamship

      companies, and possessed a capital of 120 million dollars (480

      million marks). As early as 1903, the German giants and this

      American-British trust concluded an agreement to divide the

      world with a consequent division of profits. The German

      companies undertook not to compete in the Anglo-American

      traffic. Which ports were to be “allotted” to each was precisely

      stipulated; a joint committee of control was set up, etc. This

      agreement was concluded for twenty years, with the prudent

      provision for its annulment in the event of

war.[6]

Extremely instructive also is the story of the formation of the

      International Rail Cartel. The first attempt of the British,

      Belgian and German rail manufacturers to form such a cartel was

      made as early as 1884, during a severe industrial

      depression. The manufacturers agreed not to compete with one

      another in the home markets of the countries involved, and they

      divided the foreign markets in the following quotas: Great

      Britain, 66 per cent; Germany, 27 per cent; Belgium, 7 per

      cent. India was reserved entirely for Great Britain. Joint war

      was declared against a British firm which remained outside the

      cartel, the cost of whichwas met by a percentage levy on all

      sales. But in 1886 the cartel collapsed when two British firms

      retired from it. It is characteristic that agreement could not

      be achieved during subsequent boom periods.

At the beginning of 1904, the German steel syndicate was

      formed. In November 1904, the International Rail Cartel was

      revived, with the following quotas: Britain, 53.5 per cent;

      Germany, 28.83 per cent; Belgium, 17.67 per cent. France came in

      later and received 4.8 per cent, 5.8 per cent and 6.4 per cent

      in the first, second and third year respectively, over and above

      the 100 per cent limit, i.e., out of a total of 104.8 per cent,

      etc. In 1905, the United States Steel Corporation entered the

      cartel; then Austria and Spain. “At the present time,” wrote

      Vogelstein

      in 1910, “the division of the world is complete, and the big

      consumers, primarily the state railways—since the world

      has been parcelled out without consideration for their

      interests—can now dwell like the poet in the heavens of

Jupiter.”[7]

Let me also mention the International Zinc Syndicate which was

      established in 1909 and which precisely apportioned output among

      five groups of factories: German, Belgian, French, Spanish and

      British; and also the International Dynamite Trust, which,

      Liefmann says, is “quite a modern, close alliance of all the

      German explosives manufacturers who, with the French and

      American dynamite manufacturers, organised in a similar manner,

      have divided the whole world among themselves, so to

speak.”[8]

Liefmann calculated that in 1897 there were altogether about

      forty international cartels in which Germany had a share, while

      in 1910 there were about a hundred.

Certain bourgeois writers (now joined by Karl Kautsky, who has

      completely abandoned the Marxist position he had held, for

      example, in 1909) have expressed the opinion that international

      cartels, being one of the most striking expressions of the

      internationalisation of capital, give the hope of peace among

      nations under capitalism. Theoretically, this opinion is

      absolutely absurd, while in practice it is sophistry and a

      dishonest defence of the worst opportunism.International

      cartels show to what point capitalist monopolies have developed,

      andthe objectof the struggle

      between the various capitalist associations. This last

      circumstance is the most important; it alone shows us the

      historico-economic meaning of what is taking place; for theformsof the struggle may and do constantly change in

      accordance with varying, relatively specific and temporary

      causes, but thesubstanceof the struggle, its classcontent, positivelycannotchange while

      classes exist. Naturally, it is in the interests of, for

      example, the German bourgeoisie, to whose side Kautsky has in

      effect gone over in his theoretical arguments (I shall deal with

      this later), to obscure thesubstanceof the present

      economic struggle (the division of the world) and to emphasise

      now this and now anotherformof the struggle. Kautsky

      makes the same mistake. Of course, we have in mind not only the

      German bourgeoisie, but the bourgeoisie all over the world. The

      capitalists divide the world, not out of any particular malice,

      but because the degree of concentration which has been reached

      forces them to adopt this method in order to obtain profits. And

      they divide it “in proportion to capital”, “in proportion to

      strength,” because there cannot be any other method of division

      under commodity production and capitalism. But strength varies

      with the degree of economic and political development. In order

      to understand what is taking place, it is necessary to know what

      questions are settled by the changes in strength. The question

      as to whether these changes are “purely” economic or

      non-economic (e.g., military) is a secondary one, which cannot

      in the least affect fundamental views on the latest epoch of

      capitalism. To substitute the question of the form of the

      struggle and agreements (today peaceful, tomorrow warlike, the

      next day warlike again) for the question of the substance of the

      struggle and agreements between capitalist associations is to

      sink to the role of a sophist.

The epoch of the latest stage of capitalism shows us that

      certain relations between capitalist associations grow up,basedon the economic division of the world; while

      parallel to and in connection with it, certain relations grow up

      between political alliances, between states, on the basis of the

      territorial division of the world, of the struggle for colonies,

      of the “struggle for spheres of influence.”

[1]Jeidels, op. cit., S. 232.

—Lenin

[2]Riesser, op. cit.; Diouritch, op. cit., p. 239; Kurt Heinig,

      op. cit.

—Lenin

[3]Jeidels, op. cit., S. 192-93.

—Lenin

[4]Diouritch, op. cit., pp. 245-46.

—Lenin

[5]Die

      Bank, 1912, 1, S. 1036; 1912, 2, S. 629; 1913, 1, S. 388.

—Lenin

[6]Riesser, op. cit., S. 125.

—Lenin

[7]Vogelstein,Organisationsformen, S. 100.

—Lenin

[8]Liefmann,Kartelle und Trusts, 2. A., S. 161.

—Lenin